CAMBRIDGE, MA—TIAA-CREF has entered the burgeoning life sciences sector here in a big way. The New York City-based financial services firm has acquired a 70% interest in 225 Binney St. from Alexandria Real Estate Equities, Inc. for $190.1 million.

TIAA-CREF announced its purchase of the 305,312-square-foot property that serves as the global headquarters for global biotechnology firm Biogen. While the firm did not reveal the purchase price in its announcement, Alexandria Equities in its second quarter financial filing released on July 27 reported that it had reached an agreement to sell the 70% interest in its 225 Binney St. property to “a high quality institutional investor for $190.1 million at a 4.5% cash capitalization rate.”

The property is composed of a recently constructed six-story Class A office building and two renovated historic brick-and-beam buildings. The new building has achieved LEED Gold certification. The property is 100% net leased to Biogen via a long-term lease. The TIAA Real Estate Account, a TIAA insurance separate account, will hold the property following the acquisition. UBS Investment Bank acted as exclusive financial advisor to Alexandria Real Estate Equities, Inc. in the transaction.

“This investment offers a majority interest in a well-located Class A office asset that is 100% net leased on a long-term basis to a high-quality tenant. It also offers us new exposure to the Cambridge submarket and to the life science office submarket, both of which have very healthy fundamentals,” says Sam Flood, senior director of acquisitions for TIAA-CREF Global Real Estate.

TIAA-CREF has 16 direct equity investments across the metro Boston area, including office, retail, industrial and multifamily properties, totaling more than 5 million square feet, Flood says. The firm owns 40 Broad St. and 33 Arch St. downtown, One Boston Place, 99 High St., and 501 Boylston in the Back Bay and 51 Sleeper in the Seaport.

Flood adds that TIAA-CREF plans to make further investments in the life science sector in the Boston-Cambridge region. “Yes, we remain interested in continuing to expand both our Boston and Cambridge portfolio. Assuming the right investments present themselves going forward, the intent is to expand the relationship with ARE as well,” he says.

The firm was attracted to both the property as well asto iits eventual partner at 225 Binney St. “We like that the partnership is with a best-in-class operator. Early in the process we discovered that both groups were similarly aligned, had long term hold horizons and were good organizational fits,” Flood says. “In terms of the property itself, it's recently constructed, in an established and strong submarket with long term drivers and is also well situated in terms of transit, with on-site parking and state-of-the-art bike storage. Kendall Square is very, very tight in terms occupancy and has a who's who of life science and TAMI tenants, so we feel that this immediate area will continue to improve as ARE builds out their campus and the John A. Volpe National Transportation Center gets developed."

“Alexandria is honored to announce our joint venture with TIAA-CREF, a great long-term partner. We believe that this deal is a testament to our high-quality asset base and management team. This opportunity allows us to monetize one of our core assets and invest the capital into our highly leased value-creation pipeline,” says Peter Moglia, chief investment officer, Alexandria Real Estate Equities, Inc. “We are looking forward to working with TIAA-CREF on this joint venture and hopefully on future investments together.”

Alexandria Real Estate Equities is a fully integrated, self-administered, and self-managed office REIT focused on collaborative science and technology campuses in urban innovation clusters with a total market capitalization of $10.7 billion as of June 30, 2015, and an asset base of 31.1 million square feet. Its portfolio include 18.8 million rentable square feet of operating and current value-creation projects, as well as an additional 12.3 million square feet of near-term and future ground-up development projects. Alexandria has holdings in Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park.

TIAA-CREF had $869 billion in assets under management as of June 30, 2015 and is a leading provider of retirement services in the academic, research, medical and cultural fields.